In the know: inheritance tax

Assuming that most of us do not spend our quiet evenings at home reading the Inland Revenue's publication IHT3, it may be time to bring to your attention one of its more pertinent paragraphs: "What happens if I leave everything to my husband or wife?" asks the swot at the front of the Inland Revenue classroom who actually did his homework on the tedious subject of inheritance tax.

The Inland Revenue's answer is very encouraging - but only if you are married. "Anything that you give during your lifetime or leave on your death to your husband or wife is completely free of inheritance tax [IHT]."

The catch? If you are married, it is only that you must both be domiciled in the UK which, as hurdles go, is not too difficult to jump. If you are not married, death will bring one big, financial headache, just when you are feeling at your very worst.

Much to the surprise of a colleague - and many of her unmarried, but happily co-habiting, friends - the death of either partner leaves the other with one big IHT bill as well as a broken heart.

At times like these, the Inland Revenue would probably produce out of its bowler hat one of its favourite statistics. Just 4 per cent of estates pay IHT, it would chirp. But this minority is a club whose membership is likely to go up. The IHT threshold is only £250,000, and it has been going up a lot slower than house prices. While the Chancellor raised the threshold by £8,000 from £242,000 for the current tax year, house prices were practically falling over they were running so fast.

This leaves a lot of couples, and among them my colleague, to seriously consider getting married just to avoid the IHT man coming to collect his 40 per cent not long after the Grim Reaper pays a visit.

For gay couples, the situation is dire. When the actor Sir Nigel Hawthorne died on Boxing Day last year, his long-term partner Trevor Bentham was left with a huge IHT bill on the couple's 15th-century manor house in Hertfordshire. "I felt that after 22 years living honourably together, we had been relegated to just a nice little earner for the Exchequer," he was quoted as saying. "We were being punished for not being a nice, jolly, heterosexual married couple with 2.4 children. We were a couple of old queers and that was that."

This situation may - and that is definitely a "may" rather than a "will" - be about to change after a "sensational judgement" by three senior judges in the Court of Appeal last week. The decision means that same-sex couples now have the same tenancy rights as married couples. It may well prove to be a seminal judgement for gay rights that could affect many other areas, including inheritance.

Any future beneficiaries have Antonio Mendoza to thank. He had lived in a flat in Kensington, west London with his partner, Hugh Walwyn-Jones, since 1983 (they had been in a relationship, described in court as "very close, loving and monogamous", since 1972). The statutory tenancy, which was subject to rent-rise restrictions, was in Mr Walwyn-Jones's name, but Mr Mendoza wanted to stay on in the flat on the same advantageous terms enjoyed by a statutory tenant.

Under the Rent Act, a person "living with the original tenant as his or her wife or husband" may inherit a statutory tenancy. The Court of Appeal has now decided, by applying the Human Rights Act, to change this from "as his or her wife or husband" to "as if they were his or her wife or husband".

"And Parliament having swallowed the camel of including unmarried partners within the protection given to married couples," said Lord Justice Buxton. "It is not for this court to strain at the gnat of including such partners who are of the same sex as each other."

There is certainly a gigantic step which would have to be taken to get from a victory on statutory tenancies to allowing the IHT exclusion to extend to unmarried or homosexual couples. But it is worth dreaming about, at the very least, if you can't or won't walk up the aisle.